Major Banks Target Q4 for Tokenized Deposit Network
A consortium of major banks is planning to launch a tokenized deposit network in the fourth quarter of 2026. The initiative aims to use blockchain technology to streamline payments and create new types of financial products. This move signals a significant step by traditional financial institutions to integrate distributed ledger technology into their core operations.
- The network is being developed by five U.S. regional banks: Huntington Bancshares, First Horizon, KeyCorp, M&T Bank, and Old National Bancorp. - The technology partner for this initiative is the Cari Network, a blockchain platform led by Eugene Ludwig, who previously served as the U.S. Comptroller of the Currency. - A primary motivation for the network is to compete with the rise of stablecoins by providing a regulated alternative, ensuring that funds remain as FDIC-insured deposits within the banking system which can then be used for lending. - Unlike stablecoins issued by non-bank entities, a tokenized deposit is a digital representation of a traditional bank deposit, remaining a direct liability of the bank and retaining its FDIC insurance coverage. - The project builds on earlier industry explorations, including the concept of a "Regulated Liability Network" (RLN), which has been tested by major global banks like Barclays, HSBC, and Citi to enable programmable payments and settle tokenized assets. - Key use cases beyond faster payments include enabling atomic settlement—also known as delivery-versus-payment—where a tokenized asset and the funds for it can be exchanged simultaneously, eliminating settlement risk. - This initiative is part of a broader trend among major financial institutions; J.P. Morgan's Kinexys has processed over $1.5 trillion in transactions, and Citi and HSBC have also launched their own tokenized deposit services for institutional clients.
